Market Influence & Compliance

Companies operate in an environment where the pressure to maintain profits and a fiercely competitive landscape can increase the temptation to engage in inappropriate, unethical behaviour. Strong policies and procedures for ensuring compliance are critical for mitigating this risk.

Eli Lilly & Co.

Gilead Sciences Inc.

AbbVie Inc.

Daiichi Sankyo Co. Ltd.

Leaders demonstrate strong, transparent approaches to compliance

GSK rises to 1st from 9th in 2016, with clear lead over other companies. Merck KGaA and Novartis both climb to joint 2nd place, from 11th and 15th places, respectively. The middle-ranks have two tightly clustered groups of companies. The higher-scoring group includes five companies – Eisai (3rd) to Takeda (6th). The other also has five – Bristol-Myers Squibb (7th) to Merck & Co., Inc. (11th). Rankings in this area reflect the strength of companies’ internal control frameworks for ensuring compliance, their use of enforcement processes, and the decoupling of incentives for sales staff on sales targets.

Findings

Three new leaders: GSK, Merck KGaA, Novartis

GSK, Merck KGaA and Novartis lead. They are among top performers in several areas: (1) codes for ethical marketing and anti-corruption, and (2) formal processes to enforce compliance for third parties, (3) disclosing lobbying positions with market influence, (4) having whistleblower policies in place, and (5) signing the UN Global Compact, which calls companies to align strategy and operations with universal principles for human rights, labour, environment and anti-corruption, and advance societal goals. They also have strong internal control frameworks for ensuring compliance, including auditing of third parties, and systems for continuously monitoring compliance.

GSK (1st) scores significantly more highly than other companies. Alongside Astellas and Novartis it is one of only three companies to demonstrate having all internal control framework components looked for by the Index. GSK also publishes information about its institutional memberships and the financial contributions it makes to patient organisations. In addition, during the period of analysis, GSK had a policy which prohibited payments to healthcare professionals to attend or speak at conferences.

Merck KGaA and Novartis (both 2nd) are slightly ahead of the next five companies, all with close-clustered scores. Like GSK, both companies have decoupled sales agent incentives from sales targets. For transparency in market influence, Merck KGaA scores significantly more highly than lower-ranked companies. Novartis presents all elements of an internal control framework as looked for by the Index.

Movement due to policy changes and transparency– not misconduct

In 2018, the Index is concerned with breaches in compliance occurring only in countries in scope, not globally as in 2016. One company (AstraZeneca) was found to have been the subject of a breach, previously unidentified by the Index, in a country in scope. As such, rankings in this area tend to reflect companies’ performances in policy, level of disclosure and internal control, and less so on the incidence of misconduct. As a result, companies with no breaches in 2016 that did not make strong improvements in other areas have moved down the ranks: Eisai (3rd) is an exception.

Middle-ranking companies are less likely than higher performers to disclose the financial contributions they make to organisations that may influence access to medicine in countries in scope. They are also less likely to disclose political contributions in countries in scope. They report fewer components of internal control frameworks to prevent and mitigate corruption, bribery and unethical behaviour. Although many have an audit and reviewing mechanism, most lack one or more of the additional components that the Index looks for.

The higher group of mid-ranking companies – Eisai (3rd) to Takeda (6th) – all report having a code for ethical marketing and anti-corruption consistent with industry standards, with training for employees. They also have formal processes in place to ensure third-party compliance with these standards. Along with Novartis, Eisai, Roche and Takeda newly report having incentives for sales agents that are not solely based on sales targets. Eisai, Roche and Sanofi kept similar rankings as in 2016. The lower group of mid-ranking companies – Bristol-Myers Squibb (7th) to Merck & Co., Inc. (11th) – deliver varying performances across multiple indicators. They demonstrate comparatively limited transparency in areas such as policy and financial contributions.

Eli Lilly and Gilead sit at the lower end of the second (lower) mid-ranking group. All their incentives for sales agents are based on sales targets, and neither discloses financial contributions to organisations through which they may influence policy in countries in scope. The two companies ranking lowest in this area lack transparency across multiple indicators. While AbbVie and Daiichi Sankyo demonstrate frameworks for internal control, these include only auditing and review mechanisms, which neither company reports applying to third parties.